- Bitcoin’s Futures market saw over $10 billion in Open Interest wiped out.
- CME Open Interest dropped 45% from 18th of December to 18th of March.
Bitcoin’s [BTC] Futures market is undergoing one of its largest deleveraging events, with over $10 billion in Open Interest wiped out since January 2025. The peak, on the 17th of January, was at $33 billion.
It was an all-time high in market leverage, as per a CryptoQuant analyst.
Source: X
Between 20th of February and 4th of March, Open Interest dropped by $10 billion.
The decline was seemingly accelerated by mounting uncertainty from both domestic and international political developments and market-wide liquidations.
CryptoQuant analysts describe this phase as a natural market reset, a pattern that has historically preceded short- to medium-term bullish trends.
This decline is not the first time excessive leverage has triggered a market reset.
History repeats itself: Echoes of March 2024
A similar event took place in March 2024, when Bitcoin pulled back sharply from $69,000 to $59,700. That particular event forced a wave of compulsory exits from leveraged positions, totaling $1 billion.
Additionally, that correction led to a normalization of Funding Rates across major cryptocurrencies, paving the way for a sustained rally later in the year.
As history suggests, deleveraging cycles often coincide with external economic and geopolitical developments, further amplifying market reactions.
Reportedly, the latest deleveraging wave was influenced by external geopolitical tensions and ongoing macroeconomic shifts, adding complexity to market dynamics.
A series of market reactions followed Donald Trump’s recent statements on crypto, which included claims of ending “Joe Biden’s war on Bitcoin and crypto.”
Market-wide deleveraging does not happen in isolation. Funding Rate movements offer further insight into how traders adjusted their risk exposure during this period.
From $104k to $82k — What really happened?
By late February, Open Interest on Bitcoin Futures contracts had fallen below $60 billion, down from $70 billion in January, according to Coinglass data.
Source: Coinglass
Bitcoin’s Futures Open Interest on Coinglass highlighted the connection between leverage reduction and price movements.
Between December 2024 and March 2025, Bitcoin’s Open Interest fell from $13.70 billion to $8.86 billion. The data confirms a 35% decline in OI during this period, alongside a 20% drop in Bitcoin’s price.
This suggests that the December rally was fueled by excessive leverage, which was later unwound as sentiment shifted.
Source: CryptoQuant
Funding Rates flip
Funding Rate trends provide additional confirmation of Bitcoin’s ongoing deleveraging.
Between December 2024 and March 2025, Funding Rates shifted from strongly positive to negative. That was signaling a transition from bullish to bearish sentiment.
Throughout December and early January, Funding Rates were consistently positive, reflecting high demand for leveraged long positions.
On the 3rd of February, Funding Rates turned negative (-0.00479) for the first time in months, coinciding with Bitcoin’s price peak of $101,440.
By the 2nd of March, Funding Rates had dropped further to -0.00554. This confirmed that traders were closing leveraged positions or facing forced liquidations.
This decline mirrors the March 2024 Funding Rate reset, when rates collapsed from triple-digit figures to below 20%, signaling the end of an overheated futures market.
As Funding Rates reset, Open Interest data provides another layer of insight into how capital exited leveraged positions.
How institutional traders responded
Institutional traders followed a similar pattern, with CME Bitcoin Futures showing a comparable reduction in leveraged exposure.
A sharp decline in CME Bitcoin Futures Open Interest confirms that institutional traders also reduced leveraged exposure.
Source: Coinglass
CME Bitcoin Futures Open Interest fell 45% from $22.71 billion on the 18th of December to $12.50 billion by the 18th of March, as Bitcoin dropped to $82,785.
To further validate the extent of the market reset, Funding Rate shifts on a broader scale offer an additional perspective.
An analysis of aggregated Funding Rates further supports the deleveraging thesis.
On the 11th of March, aggregated Funding Rates surged to +0.4984, reflecting an overheated market. However, a rapid reversal followed, with rates turning negative by the 18th of March (-0.0263).
Source: VELO/Coinalyze
Bitcoin’s price decline from $101,440 in February to $82,800 in March suggests that traders aggressively unwound long positions, amplifying downward pressure.
A reset or a reversal?
Despite the recent downturn, analysts see potential for a bullish recovery.
Bitcoin’s $10 billion deleveraging is one of the largest resets in over a year.
With Funding Rates normalizing and Open Interest stabilizing, traders are watching for accumulation signals that may drive a bullish trend in Q2 2025.
While uncertainties persist, historical patterns indicate that such resets often pave the way for long-term recoveries.
